iPad Sales Strong As Prices Drop, iPhone Prices Steady

The average selling price of iPads continued to fall in the first quarter, according to Apple’s earnings released yesterday. That’s a sign of the how competitive the tablet market has become as prices drop and cheaper mini-tablets proliferate.

Here are the headline figures from Apple earnings, courtesy of SAI. The results are compared with investor expectations tabulated by Piper Jaffray analyst Gene Munster:

iPhone: 37.4 million versus analysts’ estimate of 36.5 million

iPad: 19.5 million versus analysts’ estimate of 18.3 million

Mac: Just under 4 million versus analysts’ estimate of 4.1 million

iPad unit sales were up an impressive 65 per cent year-over-year, reflecting the expansion of the broader tablet market. iPhone unit sales were up a more modest 7 per cent over the same period.

Meanwhile, the iPad’s average selling price or ASP dropped $17 to $449, a 4% decline from the quarter prior. The ASP is off 31% from the second quarter of 2011, when the iPad 2 was released.

The decline is at least in part driven by the popularity of the cheaper iPads Minis, introduced late last year. Though Apple doesn’t provide a breakdown of the proportion of iPads sold this quarter that were Minis, the company did say in the earnings call that it sold more Minis this quarter than the fourth quarter of 2012.

That’s a notable feat since the fourth quarter is the holiday quarter and usually the strongest for new device sales.

The iPad Mini’s strong results validate our belief that this was a necessary product strategy — lest Apple unnecessarily lose out completely on the lower-end tablet market — and further demonstrates the mini-tablet market’s vitality.

However, prices had already been declining before the introduction of the Mini, reflecting price competition as cheaper Android tablets and new mini-tablets competed for market share.